Japan's Sharp Corp is considering expanding capacity at a factory for small to mid-sized liquid-crystal display panels, two industry sources told Reuters on Friday.
The news came after the Nikkei business daily reported Apple Inc and Sharp would spend about 100 billion yen ($1.2 billion) on expanding capacity at the plant, with the bulk of the output to be used in the iPhone.
Apple will shoulder the bulk of the investment in the Mie Prefecture plant in central Japan, where Sharp already produces small and mid-sized panels, the paper said.
The Nikkei said Sharp would start installing equipment next year and mass production is expected to begin in the latter half of 2012. Sharp has previously supplied LCD panels for Apple's iPod touch music player, the paper said.
A spokeswoman for Sharp said the information in the report had not been announced by the company.
It is not Sharp's policy to comment on particular business relationships, Miyuki Nayakama said.
Sharp is the biggest global player in small and mid-sized LCD panels, with 17 percent of the market in terms of sales, according to research firm Display Search.
Smartphone demand is expanding worldwide, encouraging major investments by Japanese electronics makers such as Toshiba Corp, which also plans to build an Ishikawa Prefecture factory to boost LCD supplies to Apple, the paper said.
Toshiba's CEO said in an interview on Thursday nothing had been decided about further investments in LCD manufacturing.
If the report is confirmed, it could provide some good news for Sharp, after media reports said Sony Corp had decided against raising its stake in Sharp's state-of-the-art TV panel plant at Sakai, switching to cheaper suppliers in other parts of Asia in a bid to cut costs.
Japanese manufacturers have superior technology in small panels, which has enabled them to retain share in that segment, the Nikkei said.
(Reporting by Reiji Murai and Isabel Reynolds in Tokyo and Soham Chatterjee in Bangalore)